Mumbai: The rupee hovered in a tight range on Thursday as gains in the sharemarket were offset by demand for US dollars from importers to meet their month-end commitments.
The partially convertible rupee closed at Rs48.455/48.465 per dollar, a little above its previous close of Rs48.52/53, having held a Rs48.41-48.48 range for most of the day.
“Just some activity in bits and parts, otherwise the rupee was very quiet. The stocks were higher, but there was good month-end demand from importers, which offset each other,” said Puneet Sharma, chief dealer at state-run Allahabad Bank.
Indian stocks snapped a two-day fall with a 2.6% rally that took them to their highest close in almost six weeks on a spate of strong corporate earnings results and data showing further economic improvement.
Foreign fund inflows into shares have been critical in providing direction to the stock market and to the rupee. Inflows of more than $6.4 billion so far in 2009 have helped the rupee recover from record low of Rs52.2, hit in early March.
The dollar held just above seven-week lows versus a basket of six major currencies, as slight gains in European shares suggested risk appetite was holding up after a mixed bag of corporate earnings.
“In the next one month the upside for the rupee looks limited. It may trade in a 47.80 to 49.25 range, unless there is sharp sell-off in equities. But in the longer term, the sentiment is rupee positive,” Sharma said.
One-month offshore non-deliverable forward contracts were quoted at 48.46/56, close to the onshore spot closing rate.
In the currency futures market, the most traded near-month contract on the National Stock Exchange and MCX-SX closed at 48.48 and 48.47 respectively, with the total traded volume on the two exchanges at about $1.6 billion.